YOUR COMPANY IS LOOKING FOR TURNAROUND FINANCING SOLUTIONS !
ASSET BASED LENDING COMMERCIAL FINANCE SOLUTONS FOR REFINANCING
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Financing & Cash flow are the biggest issues facing business today
ARE YOU UNAWARE OR DISSATISFIED WITH YOUR CURRENT BUSINESS FINANCING OPTIONS?
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EMAIL - sprokop@7parkavenuefinancial.com
7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Oakville, Ontario
L6J 7J8
Corporate turnaround business financing, simply put, involves the ' fixing ' of some major problem issues in a Canadian business. One of the best solutions for ' the fix ' is ' ABL ‘asset based financing. Let's explain why, so let's dig in.
FIXING WHAT WENT WRONG IN BUSINESS FINANCING
Top experts will agree that there is nothing more challenging than a turnaround - in effect its a ' renewal ' of a business and financing will not always, but more often than not play a major role in that renewal. Going through that whole process is also a tremendous way to simply understand ' what went wrong ‘, and as we've said many times:
‘Tuition is very costly in the school of experience'
4 KEY ISSUES IN TURNAROUND FINANCING
During a ' turnaround' several major issues tend to always come up - they includes areas such as:
1. People issues
2. Rightsizing the company to allow it to grow again
3. Address legal issues that might even include a protection filing under Canada's CCAA process (It’s the equivalent of Chapter 11 in the United States
4. The need to restructure business debt / working capital needs
We're focusing mostly on the area of financing here, but it's safe to say a lot of other issues are always going to come into play. Also we're predominantly talking about an ' operating' turnaround as opposed to some of the ' strategic ' issues involved in products, markets, engineering, etc.
HOW DOES ' ABL ' ASSET BASED LENDNG HELP A TURNAROUND?
ABL... It’s the acronym for asset based lending helps address the 3 key areas of corporate turnaround business financing - sales revenues, cost issues, and asset management and finance issues. It's simply one key effective solution that allows a financial restructure of the firm to be completed in its entirety.
THE ALTERANTIVE TO NEW OWNER EQUITY
Refinancing growth when equity issues are strained it what an asset based line of credit it all about. While more often than not it’s an operating facility that encompasses all the companies assets it can also, when applicable, include a term solution that is complimentary to the overall long term needs of the company.
ASSET BASED LOANS ARE PRIMARILY NON BANK IN NATURE
It should be pointed out that typically an ABL business credit facility is a non-bank solution. (NOTE - Some banks offer ABL financing but the why and how of that is a subject for another day)
THE COST OF FINANCING
ABL will sometimes be priced as competitively as a bank solution - we will call those TIER 1 asset financing, but most firms requiring a turnaround will typically pay a major premium to bank pricing because of the inherent credit and perception challenges involved in a turnaround .
ASSET BASED LOANS ARE ALL ABOUT YOUR SALES AND ASSETS
The essence of the ABL turnaround solution is the financing of all the business assets of the firm, margining their borrowing power to the maximum. Typically accounts receivable are financed at 90% of their ongoing value , inventory is margined at anywhere from 25- 75%, and the most unique part of the ABL solution is the ability to carve out the fixed assets/equipment of the business and include them in the borrowing power mix. Real estate that is company owned can also be included as a part of the asset based loan, further enhancing working capital access.
DUE DILIGENCE
Typical requirements to get the ABL solution in motion include due diligence around the business assets, the firms ability to prove it can provide ongoing financials, a long term cash flow and sales forecast , etc
CONCLUSION
If your company needs to address corporate turnaround business financing consider ABL as one method of getting the solution in place quickly. Those dwindling options you thought you suddenly emerge with a clear viable solution that's alternative in nature but has proven to work well for thousands of firms.
Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with financing when you need it most.
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Stan Prokop
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